Economic Stimulus Package: Free $800

The President and the Congress are discussing ways to give America an economic boost. Anyone who is paying the attention to the news and the markets knows that part of this country’s current problems are rooted in the housing bust and part of the problem is due to the fact that banks are becoming more conservative with their lending policies. There’s nothing much you can do about the banks – they’ll do what they want with their money and that’s that. Sucks. And for those of us who have worked in the housing market and studied the housing market, we saw the big downfall coming years ago, but no one listened.

All of that aside, I am glad that the Republican President and the Democratic Congress are working together in a spirit of bipartisanship to give America the boost that it needs. One of the ideas going around is to give all taxpayers an $800 rebate check as early as in the next few weeks. I have to say, this is scary for a variety of reasons.

First, I don’t know what your finances are like, but while I certainly wouldn’t scoff at $800 it really isn’t enough to make a dent in my financial portfolio. And I should preface the previous sentence by saying that I spend between 45 and 60 minutes each day going over my finances and that I’ve made tremendous strides financially in the last 18 months. Still, getting an $800 check would be nice, but it would only remind me how much of a hole that I’m in (thanks student loans!).

Second, I can only think about those bozos down in New Orleans who got free government and charity money to the tune of some $2,500 per person…and then spent that money on alcohol, new shoes, lingerie, and electronics. Folks, while these creature comforts may give you a feel good feeling right now, they’re not going to do a damn thing to help your financial well-being in the long run. I just imagine some 280 million taxpayers getting an $800 check and the only companies that see their profits go up are Nike, Apple, and Sony.

Finally, the cost of living isn’t stabilizing – it’s going up! The cost of a gallon of gas is getting higher each month, the cost of milk (yes…milk) is going up, and the cost of general groceries is going up. If it is used wisely, getting an $800 check today will help put food on the table tomorrow. But will it provide food for our tables this summer? Next fall? Next year? Unlikely.

Unfortunately this is one of those situations where there are no easy answers. Part of me wants to say that we, as a country, made this bed for ourselves and now we have to lie in it. Mortgage borrowers largely knew that their subprime loans were loaded with risky features and they knew that they were buying houses that were too big for their budgets. Yes, there was some chicanery in some housing markets, but of the millions of subprime loans only a fraction fall into that category. So in this respect, part of me believes that we have reaped what we’ve sewn.

Believing that, however, isn’t going to kick the economy in the ass. What should we do to stimulate the economy? Those $800 checks are a good start, but reducing the cost of living for all Americans will be a great second step.